IDC's private equity owners explore $5bn sale or IPO

The private equity owners of Interactive Data Corporation, the US financial information company, preparing to sell their investment in a deal that would value the business at as much as $5bn including debt, people familiar with the matter said.

Silver Lake Partners and Warburg Pincus have launched the early phases of a dual-track process that could lead either to a sale or a US flotation of IDC, these people said. The two firms are preparing to interview banks in the coming weeks.

If they opt for an auction of IDC, it could appeal to strategic bidders including financial data companies such as McGraw Hill Financial, owner of Standard & Poor's, the rating agency, or Thomson Reuters.

But the deal's possible size may put off some bidders as IDC's value would make it quite big to absorb for its competitors. As a result a listing may be a more viable scenario for its owners. Warburg Pincus and Silver Lake declined to comment.

The two US private equity firms acquired IDC in 2010 in a buyout which gave the company an enterprise value of $3.4bn. IDC was at the time controlled by Pearson, owner of the Financial Times, which received $2bn for its 61 per cent stake in the business.

IDC evaluates prices for 2.7m financial securities every day, including 46,000 corporate debt issues, 1.1m US municipal bonds and 45,000 high-yield bonds, among other services it provides.

The company reported $362m in adjusted earnings before interest, tax, depreciation and amortisation in 2014, an increase of 3 per cent from a year earlier. Revenues increased 3.7 per cent to $939m.

IDC had total debt outstanding of $2.2bn and cash of $320m at the end of last year.

Global spending on financial data, analysis or news increased 4 per cent to $26.5bn last year, according to Burton-Taylor, a consultancy. The market is dominated by Bloomberg LP and Thomson Reuters, which have shares by sales of 32 per cent and 26 per cent respectively.

FactSet is the third-largest player in the industry, with $945m in revenue.

Dealmaking in the financial data industry has stepped up of late with the acquisition of Wood Mackenzie, the energy specialist, by Nasdaq-listed Verisk Analytics for $2.8bn earlier this year.

Interest in the financial data sector has also led to recent listings. Markit, the UK-based financial data provider, raised $1.3bn from a New York IPO in June last year. Its shares have risen 7.8 per cent since, giving it a market capitalisation of $4.8bn.

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